Headline Inflation Expected to Ease to 16.6% in October
The Consumer Price Index (CPI) and inflation report for October 2025 will be released by the National Bureau of Statistics (NBS) on November 15/16. Based on our model, Nigeria’s headline inflation is projected to maintain its downward trend, moderating further to 16.6% (year-on-year), down from 18.02% in September. This anticipated decline extends the disinflationary momentum observed in the last six months and reinforces the view that the economy is gradually stabilizing due to the combination of base effects, positive supply-side factors (harvest), and reforms, especially in the FX market.
On a month-on-month basis, inflation is expected to rise slightly to 1.41% from 0.73% in the prior month. While this increase points to mild short-term cost adjustments, the annual trend remains encouraging, supported by improved agricultural supply, easing imported inflation, and better FX market stability.
Food Inflation: Harvest Gains Cushion Annual Price Growth
Food prices continue to be a central driver of Nigeria’s inflation dynamics, given that food items account for over 40% of the CPI basket. Our projections indicate that annual food inflation is likely to ease to 14.43% in October from 16.87% in September, largely reflecting seasonal improvements in food supply and lower market prices for major staples such as grains, vegetables, and tubers. The harvest season has improved market availability, easing the strain on household budgets and contributing to the overall moderation in headline inflation.
However, monthly food inflation is projected to rise to 0.79% from -1.57% in September, suggesting that while overall food prices have moderated compared to last year, sequential pressures persist due to higher logistics costs, lingering insecurity in key food-producing regions, and higher energy costs.
Core Inflation: FX Stability and Policy Discipline Support Price Easing
Core inflation, which excludes volatile food and energy items, is expected to decline to 18.63% (year-on-year) and 1.37% (month-on-month), compared to 19.53% and 1.42% respectively in September. The moderation in core prices reflects exchange rate appreciation and the lagged effect of CBN’s tight monetary stance.
The relative stability of the Naira has helped moderate the cost of imported goods. Furthermore, the ongoing recovery in manufacturing activity and better access to foreign exchange have reduced input cost volatility, fostering price moderation in non-food categories.
Nonetheless, risks remain, particularly from elevated energy prices, higher transportation costs, and increased rental costs, which may continue to exert mild upward pressure on core inflation in the near term.
Outlook and Policy Implications
The October inflation data is likely to strengthen market confidence in Nigeria’s reform direction. A lower inflation print will provide policy space for the monetary authorities to maintain a data-driven approach while balancing growth and price stability.
However, sustaining the disinflation trend will require addressing underlying structural issues, particularly insecurity in food-producing regions and inefficiencies in commodity distribution.
Looking ahead, we expect inflation to continue its downward trajectory into the first quarter of 2026, provided the exchange rate remains stable, food supply conditions stay favorable, and fiscal pressures are contained.
For investors, a continued moderation in inflation improves the real return on fixed-income instruments and supports portfolio diversification into longer-tenor instruments. For policymakers, it underscores the need to shift focus from reform to tangible results — translating macroeconomic stability into lower living costs and improved welfare outcomes for households.